Queensland budget 2018: ‘stubborn’ jobless rate prompts surge in borrowing


Updated

June 12, 2018 17:02:55

Queensland Treasurer Jackie Trad has revealed a new waste levy will boost government coffers by more than $1 billion as the state deals with the end of the mining and construction booms.

What is in the budget?

  • The state’s debt increases to $83 billion over next four years in a ‘borrow to build’ budget
  • There’ll be a $1.5 billion surplus this year, reducing to $148 million in 2018/2019
  • In the biggest infrastructure spend since the 2011 floods $733 million will go to Cross River Rail, $487 million over four years to two sections of the M1
  • $250 million to be spent over the next two years to build more space in nearly 60 Queensland state high schools
  • Government fees and charges, including car registration and traffic fines, will increase by 3.5pc from July 1
  • Cost of living concessions will increase by $200 million
  • The 50pc payroll tax rebate scheme will be extended at a cost of $26 million
  • With the new waste levy coming, $100m will be spent to encourage recycling
  • There’s an extra $700 million for more health services health, including 100 more ambulance officers, more nurses and midwives
  • The Great Barrier Reef will see $330 million to help preserve and rejuvenate it and $35 million will be spent to extend drought relief for farmers
  • There’s $239 million for more Indigenous housing and $500 million to support the national redress scheme for victims of institutional child sex abuse

The so-called rubbish tax will be imposed from the start of 2019 and the Government will compensate local councils with $32 million upfront to stop costs being passed on to ratepayers.

Figures announced in Ms Trad’s first budget show the levy will bring in a mammoth $1.3 billion by 2022, with a third of the money to be funnelled back into government revenue.

Dumping general waste to landfill will cost $70 per tonne, and aims to curb the transport of waste to Queensland from interstate.

“We have promised families that we will ensure that councils are properly funded to ensure they do not pass the levy onto mums and dads,” Ms Trad said.

Others new taxes to hit Queenslanders next financial year will include a tax on luxury cars, more foreign land ownership penalties and an increase in car registration.

The Treasurer will also put the state into more debt in a bid to fend off twin economic threats caused by the end of the construction and mining golden years.

Total state debt is on track to hit $83 billion in the next four years, but Ms Trad was adamant the borrowing level remained responsible and would boost jobs and growth.

The State Government will devote the extra borrowings to a huge four-year infrastructure spend of $45 billion on projects, including Cross River Rail, widening the M1 and the new North Queensland stadium in Townsville.

Ms Trad said this would generate up to 38,000 jobs and help offset a cooling in construction.

“Our liveability and our affordability will be compromised if we don’t make the investments in infrastructure today,” she said.

“We need to ensure that there is a pipeline of capital works and construction jobs for those Queenslanders who are seeking employment and that’s why, quite frankly, we have brought forward some borrowings to pay for infrastructure investment in our state.”

Details revealed in Tuesday’s Queensland budget indicate the state economy is strong, with another injection of mining royalties set to triple this year’s expected surplus, rising from $485 million in the mid-year update to $1.51 billion.

The huge influx of interstate and overseas arrivals has kept the economy chugging along, making Queensland’s $360 billion economy bigger than those of some European countries.

But there are warning signs households may soon come under increased pressure, with unemployment struggling to drop amid a transitioning economy.

Unemployment to remain ‘stubborn’

Queensland has one of the strongest job growth rates in a decade but unemployment is higher than this time last year and is not expected to fall below 6 per cent until at least 2021.

Queenslanders hit with new taxes

  • Interstate online betting companies will face a 15 per cent wagering tax, which could be passed on to Queensland gamblers, raising $30 million next financial year
  • Taxes for overseas property buyers will rise from 3 per cent to 7 per cent, raising $33 million
  • Duty on cars worth more than $100,000 will rise 2 per cent, adding $24 million into the coffers
  • A 0.5 per cent rise in land tax on properties worth more than $10 million will raise an extra $71 million
  • Car registration will rise 3.5 per cent from July 1, raising an extra $49 million

Ms Trad said the “stubborn” jobless rate was largely a result of an influx of interstate job seekers.

“We are experiencing significant growth in our interstate migration so more people coming to Queensland looking for work but we’re also seeing increased participation by Queenslanders in the economy seeking jobs,” she said.

“We want to respond to that to ensure that we have the programs to support them.”

Over the past four decades, Queensland’s population has more than doubled, from 2 million people in 1974 to 5 million people this year, with the current growth rate almost double the national average.

State Government officials are predicting another 1 million people will move to Queensland within the next 11 years.

Low household spending

While productivity in Queensland is higher than a decade ago, low wage growth is putting households under continued strain.

Budget figures show Queenslanders are spending less and are likely to throw any spare money into their home loans, with signs the housing boom is slowing.

Last financial year, the rate of household saving across Queensland sank to its lowest in almost 15 years, indicating any growth in income and wages is being used to pay off household debt rather than translate into increased consumption.

Household spending is predicted to remain lower than it had been prior to the global financial crisis.

Queensland Treasury officials expect apartment prices to soften with construction now on the slide.

Infrastructure spending key budget focus

The State Government hopes spending big on infrastructure will help stimulate the economy and prepare the sunshine state for future needs.

In the next year, $11.6 billion will be spent on major projects, with more than half of the cash splash to be spent on construction outside the south-east corner.

It includes major projects like the Rookwood Weir in Rockhampton, the new North Queensland stadium in Townsville and the redevelopment of the Cairns Convention Centre.

While coal royalties remain the cornerstone of Queensland’s exports, the huge construction and employment investment in Liquified Natural Gas (LNG) is coming to an end.

State Opposition Leader Deb Frecklington described the budget as an “obscene” tax grab and a breach of trust.

“This is a budget of taxes, debt and unemployment — five new taxes, four new fees, $83 billion worth of debt, the country’s worst unemployment,” she said.

“This is a budget of broken dreams and broken promises for Queensland’s next generation.”

Trade and mining revenue up

Trade with Queensland’s international partners is keeping state Treasury officials happy, with strong growth in the United States and moderate growth in China, Japan, Korea and India.

Mining royalties are delivering more than expected for the second budget in a row.

Who said what?

  • Transport, tourism and economic groups have all expressed support for spending big on major infrastructure projects.
  • The Chamber of Commerce and Industry Queensland is concerned about debt rising to $83 billion and how Queensland will pay down the borrowings.
  • Paul Turner from the RACQ is angry drivers will pay 3.5 per cent more for car registration. “And that on top of a stamp duty increase, [this] is about an extra $100 million in taxes out of motorists this year compared to last,” he said.
  • Housing Industry Australia said a $5,000 reduction in the First Home Owners grant was the “the last thing we need” for housing affordability.

The state’s revenue from coal and gas exports is a combined $2 billion higher than earlier estimates for this year and next — almost $3.5 billion dollars higher over four years.

On top of that, increased dividends from government-owned corporations mean general revenue is now expected to be $3.3 billion higher across this year and next, boosting this year’s surplus to $1.5 billion.

But as spending grows over coming years, that surplus will fall as low as $110 million in 2021.

Although much of the extra revenue has been allocated to Labor’s building program, more debt will also be paid off than previously planned, meaning debt will be lower than previously forecast over the next three years.

But it is then projected to jump by $4 billion a year in 2020-21 and again the following year to $83 billion.

“We are borrowing to build the infrastructure that our state and our communities need. Our interest payments on our debt are around 3 per cent of revenue, compared to almost 5 per cent under the LNP,” Ms Trad said.

“We think what we have here in Queensland is something that’s stable and sustainable.

“The alternative is to do nothing, to sit back and let our roads continue to be congested, to let our hospitals run down and continue to educate our kids in demountables.”

The budget papers predict the economy will grow by three per cent in 2018-19 then by 2.75 per cent a year, with inflation tipped to rise from 1.75 per cent to 2 per cent in 2018-19 then 2.5 per cent the following year.

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First posted

June 12, 2018 14:11:30



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